Take action on seven money worries
According to a recent Gallup poll, most of us are facing a range of financial challenges, from trying to earn enough money to live comfortably, to the cost of health care. The best way to confront money worries is to refocus your energy into action. Here are clear steps you can follow to start fixing your biggest money problems.
1. What if I lose my job?
- Increase emergency savings. If you're worried you may lose your job, save more today.
- Consider part-time and project work if you're unemployed, rather than waiting for the perfect full-time job.
- Create more income with a second job.
2. How can I get out of debt?
- Pay off your credit card debt with the highest interest rate first.
- Reduce the interest rate on your credit card debt. See if you can qualify for a balance transfer to move a balance from a higher-rate account.
- Take on more work, then use the extra income to pay down debt.
3. How can I control health care costs?
- Be fee conscious. If you need tests or medication, talk to your health care provider about your lowest-cost options.
- Consider a high-deductible insurance plan. If you're in good health, a plan with a higher deductible will charge a lower annual premium.
- Check if you're eligible for a Health Savings Account; it's a valuable tax-deferred way to save for medical expenses.
4. How can I build my savings?
- Make it automatic. It's easier to save when you have automatic transfers set up.
- Scour your budget and reduce unnecessary expenses.
- Ask your bank how to limit monthly maintenance fees on your checking and saving accounts.
5. Will I have enough for retirement?
- Calculate your savings goal for retirement.
- Save automatically: payroll deductions through a 401(k) at work are a great way to save.
- Increase your savings a little each year. If your 401(k) contribution is 4% of this year's salary, raise it to 5% next year. Keep up the annual increase until you save 10% to 15% of your income.
6. How can I pay for college?
- Know your savings priorities: retirement first, college second.
- Set aside savings in a 529 College Savings Plan, and withdrawals can be tax-free.
- Borrow smart. Students should borrow first with a Federal Stafford loan; the top fixed rate is 6.8%.
7. Can I cut gas and transportation costs?
- Join a carpool, use public transportation, or ask to telecommute once a week.
- Keep your car in tip-top shape. A well-tuned car will have better gas mileage.
- Trade in the gas-guzzler. Before you shop, call your insurance agent and ask which car models have the lowest insurance premiums.
If you have other financial challenges, review the articles on learn.bankofamerica.com to see if we have solutions to your money problems. And talk with your friends, family and financial advisors for ideas on improving your financial security.
What's next? The benefits of a savings account